Smart Credit Card Use

Submitted Credit Card Tips and Insights

This advice article featuring tips for smart credit card use was written for site visitors by R. Grimsby. 

Are credit cards a trap? The answer is both yes and no. People can, and often do, get trapped in a cycle of revolving debt through poor management of balances. However, credit cards can be a useful piece of your overall financial picture, if managed responsibly. Here are three simple best practices for smart credit card use.

Pay the Balance in Full Every Month

Many people make the mistake of forking over the minimum payment only. This might seem like a good deal: you pay only $20 now, but maintain access to $2,000 in spending next month. However, paying the minimum balance is the biggest mistake you can possibly make when it comes to your credit. 

The remainder of your balance accrues interest - money that you will have to pay sooner or later. If you can't pay the balance in full, pay as much as you can afford and work to pay down the entire balance in the following months to avoid accruing extra interest. 

Cancel Extra Cards

You may be able to afford to pay off your entire credit card balance. The problem occurs when you maintain multiple balances. Keeping track of multiple cards and ensuring each is paid of in full are the challenges.

No matter how robust your checking account, you can still get hit with fees and extra interest if you miss a payment. Two or three credit cards is a reasonable number. Five cards is unwieldy. One card is the best.

Set up automatic payments from your checking account so you never miss a bill payment on any of your cards. Apps like Mint can help you keep track of multiple card accounts in one interface and send you bill payment reminders.

There's an added bonus to studying your bill every month: you can see where your money is going. This can help you adjust your lifestyle and save money. You may catch poor spending habits you didn't realize you had just by looking over your credit card bill.

Be Smart With Credit

There are a lot of ways you can screw up your finances with credit cards. It only takes a few mistakes to damage your credit score and rack up interest charges. However, responsible credit card use has excellent payoff. Avoid the usual pitfalls of credit cards to maintain good credit and manage your finances smartly. 

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